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Discovering the Dirty truth behind customer loyalty

The majority of the consumers believe the sellers in the name of “LOYALTY” (Srivastava & Rai, 2018). Moreover, they expect individual and customised loyalty programs thinking that loyalty programs are true and offers them rewards and offers.

Loyalty is the emotional attachment to a product, service, brand etc for a long span of time. Loyalty is a psychological feeling which a consumer may undergo only after he/she uses and experiences a product or a service given by a brand. Loyalty is an important pull strategy used by the marketers to retain the consumers for a long span of time.

However, marketers should first know how to differentiate a consumer and a customer in this competitive world before they bestow loyalty programs to attract them (Uncles et al., 2003). For example, I buy a toy car for my five-year-old son produced by ABC brand. I as a parent execute the responsibility of buying a toy for my ward after a detailed research because I am the person who is going to pay the money for the toy being bought. Though I don’t use the toy car to play and experience. In this regard, I am the “Customer” and my son is the “Consumer”.

If marketers are having pre-fixed their marketing strategies to attract only consumers, then probably they will have to lose few important customers. Loyalty is not just concerned with the product/service experience, but also affinity to a particular brand due to various factors such as: Price, Quality, Quantity, Usage, Service etc (Vilkaite-Vaitone & Skackauskiene, 2020). Marketers have to be broad minded to attract customers and consumers, stimulating purchase action and then giving them an opportunity to undergo a service or consume a product which will automatically lead to customer loyalty. In India, income is a major element bound by loyalty. For example, if a brand offers me any FMCG product which is affordable to me and also has superior quality and quantity I will automatically become loyal to the brand. However, not all the consumers have the same mentality to look for a product/service price. Thus, income has been used as a weapon to attack consumers by the marketers.

Consumer demographic and loyalty

A recent report by KPMG mentions that 84% of the people in India depend on loyalty offers and programs which has been offered by marketers and retailers. For a country like India, where the population is too huge and people belong to different demographics background, it is very easy for the marketers to attract the Indian people using a brilliant segmentation strategy. Long gone are days when “STP Approach” Segmentation, Targeting and Positioning was used to carefully examine handpick those customers who might be very prospective for the business. In this process, the sellers gave importance to four basic factors: Geographic segmentation, Demographic segmentation, Psychographic segmentation, and behavioural segmentation. Picture (1.0) explains the psychological triggers associated with loyalty.

  1. Emotions are always attacked by the marketers in the name of loyalty. Henceforth, is attacking emotions is an unconscious touch. This touch will be liked by the consumers because loyalty programs and behavioural intentions always have a strong association (Hwang & Choi, 2020)
  2. Marketers build confidence and trust by providing the best product and service information and motivate them to get involved in the purchase/consumption. However, the utility of the product is not up to the mark. Being honest and transparent with customers/consumers do not mean that the brands are loyal towards the consumers. It would be a business trick to enhance sales.
  3. Passion can be created for a product by enhancing brand reputation.consumer-loyalty-marketexpress-in
     Psychological triggers associated with loyalty

Consumer demographic and loyalty
A recent report by KPMG mentions that 84% of the people in India depends on loyalty offers and programs which has been offered by marketers and retailers. For a country like India, where the population is too huge and people belong to the different demographic background,  it is very easy for the marketers to attract the Indian people using a brilliant segmentation strategy. Long gone are the days when “STP Approach” Segmentation, Targeting and Positioning was used to carefully examine handpick those customers who might be very prospective for the business. In this process, the sellers gave importance to four basic factors: Geographic segmentation, Demographic segmentation, Psychographic segmentation, and behavioural segmentation. Picture (1.0) explains the psychological triggers associated with loyalty.

1. Emotions are always attacked by the marketers in the name of loyalty. Henceforth, is attacking emotions is an unconscious touch. This touch will be liked by the consumers because loyalty programs and behavioural intentions always have a strong association (Hwang & Choi, 2020)
2. Marketers build confidence and trust by providing the best product and service information and motivate them to get involved in the purchase/consumption. However, the utility of the product is not up to the mark. Being honest and transparent with customers/consumers do not mean that the brands are loyal towards the consumers. It would be a business trick to enhance sales.
3. Passion can be created for a product by enhancing brand reputation.

However, in the recent years the sellers have become a very commercial offering loyalty programs that really do not benefit the consumers rather this leads to disloyalty. There are many miscreants who use the name of few e-commerce brands like Amazon and Flipkart and advise the customers to send the messages to individuals and groups in their WhatsApp application. The customers provide all their personal information and then later realize that it’s a bogus game. Few loyalty programs expect the consumers to plat games like: Spin and Win, Lucky draw, Special coupons etc. However, these loyalty programs do not work and are fake. Customer loyalty also enhances when they come across positive messages and reviews on the online platform posted by users of the products. This increases their trust and confidence in preferring a brand. Many online platforms, selling products, purchases feedback and give a reputed preview to the customers. Another interesting scenario is when consumers loyalty points are added and can be redeemed in the future. However, the majority of the consumers points are not redeemed, and it remains unspent, and this is not known by the customers themselves. These are a few examples to explain how loyalty programs work.

Artificial bandwagon effect

The myth behind customer loyalty must be understood with a very keen sense because Indian consumers who are very loyal towards a particular brand use word of mouth to popularize the brand among friends and peer groups and this is how the brands become famous. In this case the customers would not have personally consumed the products, but remain to be loyal to a brand. This is because of “Blind trust” and “Brand Irrationality”.

1. Consumers are not aware of the brand utility as they have not consumed the products; but still stays loyal.
2. The consumers would have used the product only once in their lifetime, but still has a devotion towards the brand.
3. The consumers would have bought and experienced the products after which they stay loyal.

The majority of the brands create an artificial Bandwagon effect for their brands by popularizing it using Word of Mouth and Word of Mouse strategies. This motivates the consumers to be irrationally loyal to brands without any previous experience.

Income weapon and loyalty

For example, in India there are 3 classes of people. A class people, B class people and C class people. A class, people are rich. And can afford to buy any type of products and service. Whereas B class people are the middle income people they might save money and then buy the product in the future, but C class people are not able to buy the product and it is only a dream for them. There is a need to understand the relationship between loyalty programs offered consumer demographic influence. The very famous concept in marketing is called the segmentation positioning and targeting must be re-considered in this context. It is just a fairy-tale story that marketers do not discriminate consumers and they treat everyone equally by offering equal loyalty programs. However, not all the consumers are applicable to benefit from the loyalty programs offered by the marketers, but only a very few consumers who fall under the tag “Contributors towards profitability position”. The marketers also take a lot of efforts to ensure that these consumers are happy by providing them many benefits. Today’s marketers take extra efforts to ensure that they retain the existing customers who are also considered to be a good duck for a brand. This is because they are involved in repeat purchase and frequent purchase and ensure that they relate to the brand for no reason.

Loyalty is a term which has lost its values in the recent times because of unethical marketing. In the name of loyalty programs brands influence the consumers and try to maximize their wealth. However, in reality loyalty programs are not very much beneficial to the consumers. Loyalty programs motivate the consumers to spend. It has to be concluded that marketers in the name of loyalty, try to touch the heart of the consumers and motivate them to get involved in frequent purchase action to earn profits. Thus, the theme ““Heart, mind and wallet “Discovering the Dirty truth behind customer loyalty” is true if explored in detail.

Key takeaways

  • Consumers have to be clearly explained about the loyalty programs and reward points and how it can be used
  • In the name of loyalty programs and offers customers should not be cheated
  • Unethical marketing bounded with loyalty has to be avoided which will bring negative impact in the long-run
  • Consumers have to execute their responsibility of “Caveat Emptor” and be aware about the loyalty programs and rewards
  • Loyalty programs requesting the consumers to get involved in re-purchase have should be transparent and clear
  • Firms dealing with annual membership as a part of loyalty program have to be honest and should not cheat the consumers
  • Point programs, paid programs, charity programs, Tier program and process program have to be accurate and should benefit the consumer community.

References
Hwang, J., & Choi, L. (2020). Having fun while receiving rewards?: Exploration of gamification in loyalty programs for consumer loyalty. Journal of Business Research. https://doi.org/10.1016/j.jbusres.2019.01.031
Srivastava, M., & Rai, A. K. (2018). Mechanics of engendering customer loyalty: A conceptual framework. IIMB Management Review. https://doi.org/10.1016/j.iimb.2018.05.002
Uncles, M. D., Dowling, G. R., & Hammond, K. (2003). Customer loyalty and customer loyalty programs. In Journal of Consumer Marketing. https://doi.org/10.1108/07363760310483676
Vilkaite-Vaitone, N., & Skackauskiene, I. (2020). Service customer loyalty: An evaluation based on loyalty factors. Sustainability (Switzerland). https://doi.org/10.3390/su12062260